The Obsession That Destroys Startups (with LayerZero CEO Bryan Pellegrino)

Transcript

Everything is hard, right? What you pick matters drastically. Is the asymmetry profound? Is it massive? Is the outcome drastic part of crypto? Part of the beauty of this changing industry, there is a structural change with the way that money works. Like I can't think of a larger shift than the literal entire financial system or money itself, right? I had a chance at one point to hear Elon speak and I got to ask him one question. I said, "We're in a highly competitive industry. How do you think about competition? how do you think about the environment? Like all of these different things about it. And his answer was just like so crystal clear. It completely changed the way we thought about running the business.

>> What did he say? >> Brian, thank you for being here. >> Thank you so much for having me. >> Let's zoom out. Let's go really big picture. Like why do we need interoperability at all in this in this arena? give me like the the the reason for being. >> Reason for being is very simple. Uh it is clear more clear now than more clear than when we started even more clear now. Uh there are just going to be more and more chains right general purpose chains uh exist but you're seeing a lot of apps. I mean even even something like tempo uh even arc from circle again Salana diving heavily in the payment

side. You see uh Robin Hood is launching their layer 2. Like there's so much of wanting to own that layer and so much of the app specific side of things and there just was no way to talk to each other, right? Imagine not having the internet, right? We're still just existing like great, you this really sweet cluster at Stanford and DARPA and at all these cool places and you interact kind of in your local circle, but uh the layer of commerce and the layer of um you know what can be built on top of that was just was necessary. And so we saw that very early on that there just had to be a way to do this thing. And I think if you look at it now, um I mean we did $ 37 billion moved across layer zero this month. That's a you know pushing almost half a trillion

dollars annualized. Uh to put it in perspective >> and this is October 2025. >> October. Yeah. Yeah. Uh Western Union uh is about 9910 billion a month. wise is like 16 like the only money or payments processor uh that are not you know to take Visa out of it is really just like PayPal Revolute and maybe one or two others right it's already to the point where the amount of economic activity is is just massive it really is uh to the point where it's being used widely in production it's being used uh in so many different variety of use cases um and stable coins have just been a huge accelerant for this um yeah >> so you mentioned some fintexs and some other players like Stripes Tempo,

Circles Arc. There are a lot of corporations getting involved in crypto and launching their own chains. How do you expect this to affect the crypto industry? Um are you expecting uh that we will continue to have a multi a vibrant multi-chain world or will there be some sort of centralization or consolidation uh that begins to happen and how does that affect what you're working on? I give a talk uh maybe about two years ago now maybe it was last year s on almost exactly this which was I'm still I my first touch in crypto was 2011 and online poker like that and just got banned in the US I woke up there's department of justice symbols on all the websites payment processors are down my career is gone all my money's frozen and I was like oh wow like government

overreach some sometimes isn't cool right like I didn't even know what happened and so Bitcoin was first product market fit there that was how we moved moved money around the remaining poker states. Uh, and so I really saw the impact of what it had. And being in the industry for so long, I I naturally want to view myself or view the industry as an underdog. I still view us as an underdog. And yet I talked to the institutions now and it's very clear, right? And so I I think institutionally they fought us every single step of the way. Every step of the way, kicking and screaming. They could have snapped their fingers and killed it. They would have absolutely done it a thousand different times. And so now that we're here in the last mile, uh we've won, right? It's

like uh not uh you know, not by any other reason than that it is a strictly better technology. >> First they ignore you, then they fight you, then then all of a sudden they adopt you. >> Exactly. We have lived that cycle. And so it is just we have one because it is a strictly better technology. in the thought that we should compromise now in the last mile. One, it means we probably take away all of the force um that has gotten us here and and forced them all to look inwards and force them all to sort of start to adopt this. So, we probably lose that. Uh and two, they're just like there isn't the need to make the compromise here. Again, every every institution in the world is looking at Tether like 16 billion dollars on 100% headcount. You know, it's the best

business in the entire world, right? it's uh there just very clearly uh is a market here. It's a multi-t trillion dollar market. Um and so I think to compromise now would be just an unbelievable shame. But I also think because we have built up the infrastructure, because we have there's been so many years of building this and showing what actually can come from it, that any attempt to heavily centralize after will likely just be out competed. At least in environments now when it's that wasn't necessarily true a couple years when regulation really could have borne down on the industry and and tried to kill large parts of it. It seems like we're in a place right now where innovation is reasonably open. people are pushed actually to push the

technology forward and again the institutions are no longer pushing against it. They're actively leaning in. They want to see what it can provide and where it lands. So I think there will still uh be a long cycle of innovation. I think people are still going to continue to push and I think the most decentralized structures will win long term. >> What doesn't kill you makes you stronger. Um, so there was a a very a bleak period there with the full-on regulatory assault against crypto, but it was withtood and now we're seeing this amazing institutional adoption going on. >> Y >> um what's something that working in crypto made you change your mind about?

Like maybe what's a belief you held that working in crypto made you reassess? Yeah, I mean I I I came in just given my background. I came in I think a lot of people come in and have to learn about adversarial systems. I have to learn about zero sum environments, why Byzantine fall tolerance matter, all of these different things. I had come from sort of one of the most competitive zero sum environments that exist. So I I knew how to think adversarial. I knew I spent a lot of time in game theory and spent a lot of time in these sides. >> And this is because you were a pro poker player. You were sitting at the poker table. The money you can make is your opponents uh at your sides. Yep. And so I had spent a lot of time studying and thinking through that lens. So I most of

that I I already had I think actually the largest things that I've changed is everything I had done prior is more company building than than industry but everything I had done prior had been small groups three to 10 technologists and I had we've promised ourselves so many times like oh we'll we'll never go past 25 people we'll never go past this right and it's just um when you have a collection of like really smart really motivated people you end up having we certainly have a thousandfold more opportunity than we could ever possibly take advantage of, right? Um, and so it's really this process of I think I spent a lot of time in life trying to find the thing to say yes to. And I think I spend so much time now trying to

find the things to say no to and really trying to be hyper specific about the things that I'm doing where I think most of my life I was very I was very broad. I loved I mean that's how I found my way to crypto. I I loved tinkering. I loved, you know, I was in all of these different industries, AI, crypto, all this stuff way before it was like cool and mainstream. And uh I I just like tinkering at the fringes. Um and I think it's been so rewarding to just be like very narrow and very focused and figuring out how to strip out the rest. And I think it's completely change the way we run the company, the way we design things, the way we do everything.

uh still a work in progress, but I think it's probably the largest shift of me personally as I've had to lose not I mean the curiosity is still there but I've had to lose the I guess poker conditions you to any plus EV spot is a good spot right if you as long as it's repeatable and you can make any amount of uh small edge you take it uh and >> EV being expected value >> yeah and I think and so life is really much not like that life is really much uh very much you know pure asymmetry and being very concentrated being very specific about what you tackle and how and giving yourself the best possible chance to be in the position to sort of capitalize on that.

>> How do you decide what to focus on, what to say yes to, what to say no to? What heristics do you use? >> Yeah. I mean, I think like think ultimately that's the job, right? I think like that that is the job. I I think my general stances I I have a couple uh you understand some of this comes from very small town chip on my shoulder growing up etc. Like my broad stance is nothing isn't nothing is that hard, right? Everybody wants you to think everything is so difficult. This field is so difficult. You have to go get a PhD. You have to nothing nothing is like that hard. Nobody's that good. People are mostly inherently like kind of a little bit lazy and there's like a few outliers are really good. Um so nothing is that hard, but at the same time

everything is hard, right? It's like if you're going to do something, you can pick almost anything and if you want to get very very good at it. Uh on a global scale, talent is just like it's it's very difficult. It's just a lot of pain, a lot of everything. And what you pick matters drastically, right? So the example I typically give is like um favorite anecdote is my my friend uh his father uh was a grandmaster and his uncle was the highest non-rated chess player, a non-Russian chess player in the world. >> Oh my god. Wow. And at five years old, he said, uh, you know, dad, I I want to learn chess. Uh, like I'm ready. I really want to go. And his dad said, don't bother. You're too old. Right?

And, uh, it's like, if me, you, everybody here wanted to become like the seventh best chess player in the world and us and our kids and our grandkids, like none of us would probably do. Incredibly difficult. And yet, even if you were there pre-streaming, there's like z like that guy still has a real job, right? So, like there's zero asymmetry. And like there's joy. asymmetry doesn't need to be like financial outcomes, but I think everything to get very, you know, getting to 0.1% is pain and sacrifice and toil and dedication and all this. So, it's going to be hard no matter what. You need to be very selective about the thing that you are interested enough and have enough conviction that you're not going to quit along the way.

Way too easy to quit along the way. So, you really have to have internal conviction that this is a thing that you can't stop thinking about. you you visualize in the world like that kind of things with high conviction in that if you get yourself in the top 0.1%. and you get it the luck all you know some luck on the other end that you need all of these things is the asymmetry profound is it massive is the outcome drastic and I just think most people think about the moderate term wins you see everybody in A16Z I'm sure you've seen a thousand of the pitches like we still 1% of the market we're rich hooray you know it's like it's very everybody's there and I I I really want to think through the lens of like >> what happens if we get like 100% of the

market or What happen? What happens if we win, Lisa? Like, is this a big enough problem if we win the whole thing? And I don't care that this person or that person has been there for 50 years and I don't care that they're a trillion dollar business. Doesn't matter to me, right? Is it a problem we're solving? Is there enough asymmetry? And then naturally, do we have an unfair advantage? Right? part of crypto. Part of the beauty of this changing industry is a lot of us who have spent so much time here. There is an embedded unfair advantage because there is a structural change with the way that money works.

There's a structural change with the way that the globalization and the mobility of dollars works where prior was top down. It was very government driven. It was tariffs. It was everything. And now it's very bottoms up. Anybody with a phone, look at look at Egypt and Nigeria and Argentina and all, you know, all these places like anybody with a cell phone in the internet has the ability to get access to dollars, to get access to Bitcoin, to do these things. And it's very bottoms up and the world is changing and there's probably never been a larger shift like I can't think of a larger shift than the literal entire financial system or money itself, right?

And so like there are embedded unfair advantages that we have by being very close to the technology. Other people have unfair advantages through distribution and many years of doing this, right? There's there's both sides of it. But what are the unfair advantages we have? What is the market? Is it worth tackling? And is this something I want to, you know, dedicate my life to? If I get 10 years down the other side, like we did it, is it something where I'm like, you know what, this was freaking awesome. Uh, and so I like th those are the things that go through my mind that we talk about internally, Ryan and I, my co-founder all the time. I'd like to ask you about the nature of competition. Um, now I know you're a former wrestler. We talked about your professional poker playing days. You know, these are games where

there are winners and there are losers. How do you think about the world broadly? Do you see it in zero someum terms? >> No, definitely not. I think I I am extremely competitive but more competitive in the what we are doing than than anything else. And so Ryan always uh he always jokes been together for 20 years building building stuff together and our our very first company we'd be launching product and we'd be just the three of us me Ryan and Caleb it would be you know 3:00 in the morning we're tired we've got to get it out it's like we had hit this deadline and like all right like here here it is right is you know here we're done it's fine it's here and I would just point

you know something out like like does it really matter and I would just always be like well well better is better right it's always just this increment mental like always always always push to be that little bit better. I'm I'm hyper competitive. I want to win at what we're doing. Like I want to win the market. Um but the other thing I I think early on early on I probably thought about it more zero sum. Uh I thought more about what competitors were doing. I thought more about the market looked like. I was trying to tell everybody why all of this is wrong and we're right. I think I spent so much time and uh I've told the stories a couple of times. So, I got the I got the chance at one point to hear Elon speak and I got to ask him one

question. The one question I asked him was about that. I said, "We're in a highly competitive industry. Um, how do you think about competition? How do you think about the environment?" Like all of these different things about it. And his answer was just like so crystal clear. It completely changed the way we thought about running the business. >> What did he say? >> And he said, "Do not think about competition ever at all. The only thing that you should ever think about is building the thing of the absolute maximum utility. Focus only on building the best product. If you ever spend time on what other people anything else, it's just like wasted cycle. You know, it's just completely like it didn't even register for for one second that he should be spending time thinking about

how other people launch rockets or build cars or do anything. It's just build the best product. Uh, and I think it's changed a lot how we internally like extremely competitive. We try to hold ourselves to an extremely high standard of like building the best product. Um, but it's not what they've done. It's not this thing that they're launching. Uh, it's it's us. And again, the other thing we talk about internally a lot is like, you know, we didn't again $37 billion. Great. Amazing. A year ago, I could not have thought about it. Still right now.

This is the market. Ryan and I are both like this is a market right now. We want 90% market share. Here we are. Uh this is not worth having spent you know it's not enough. It's not like what we are here and having this huge market and doing everything. Uh that was not a worthwhile thing to dedicate our lives to right. Uh it really is there is a lot more and we have to create the market. we have to create value and we have to enable much much much more to be able to be uh driven and created on top of this layer and so like I think there's that side of competition too and that I think a lot of people see what is the market and can I win it and I think for us it's like this market didn't even exist when

we we created this side of the market and then it got super competitive and then we won this side of the market and still it's just like it's it's not if this is all there is it's not enough we have all of the banks all the institutions all of everybody Right. Uh I just heard that Broadidge did like $9 trillion this month on its own into repo settlement. There's all of this uh you know the numbers that we're doing now the amount of value that's being moved but actually being touched in terms of the broader financial system is a you know a single pixel on a very large screen and I think uh we just have to be driven to do more than other people expect of us than we expect originally of ourselves. You know what I mean? It just has to be more. So that side I'm

very committed. >> So you mentioned a few things in there. One, the mus the um the advice from Elon Musk. It it seems to be a a line that you hear from other people who have been extremely successful in their industries. It's very much aligned with like the Jeff Bezos mentality of be uh obsessed with your customer. Uh and it is a way of sort of shielding yourself from this this like local minima of looking at what your competitors are doing. The way to outflank them is to be absolutely obsessed with uh the end user and the person you're going after. And then uh the other thing you said, oh yeah, uh about the zero sum mentality and maybe mis uh misunderstanding market opportunities. This is a classic mistake

that that people make is when you see what a market is today and just assume that you're going to go after one slice of it rather than uh you know create a potentially new market or you know like you said go after 100% and see what else you could get from it. Um, and even the masters have gotten this wrong. Like Clayton Christensen, very famous uh uh economist who came up with the innovators dilemma. He wrote about this and even he whiffed on understanding a technological opportunity. Like he famously said the iPhone was not going to be uh disruptive because he was basing it off of phones uh rather than computing broadly. Um so it is it is something that even the experts get

wrong >> and I love the other things we just iPhones we are you know Ryan my co-founder especially but we're both very uh big Jobs fans big Apple history fans one of the biggest principles I really love from both Apple itself but really driven by Steve is is you cannot be afraid to disrupt yourself. You know what I mean? You you cannot even though the iPod exists like put the put the music on the phone. You know what I mean? like you cannot be afraid because somebody else is going to come and you have to be willing to sacrifice some of the existing stuff to win the bigger picture and I think that's something people get very that's poker is good at that you do not get emotionally attached to to past things right uh it is purely expectation from you there's no sunk

cost um but uh yeah I think that that side of things is is tricky very tricky >> and it's amazing because people know this they know this to be the case and yet it is so painful to do in practice that people continue to make mistakes and do the thing, you know, uh avoid the short-term pain and it ultimately gets them. I mean, you see this over and over and over again. >> Y >> Oh, also, uh what you were saying earlier about the Elon Musk advice, it reminds me of the Mad Men meme of John Ham in the elevator. He's like, >> man sends it to me all the time.

>> I don't think about you at all. Like cutting devastating. >> Um you have time for a lightning round? >> Yeah, let's do it. Okay, so a few rapidfire questions for you. What advice do founders receive that they should completely ignore? What advice found I mean I think the the worst thing that people do is is basically rely on advice. So I think almost all is like my real answer. I think there are very specific things, but I think again I think it comes down to conviction. And I think it has always been my stance that we had the rosiest path you could probably ever have to fundraising to all of this stuff. And there was like six different times we could have just quit the company, right?

There's like if you don't have burning conviction in the thing that you're doing, you will find a way to quit or pivot or do something else. And so if you are relying on the underlying advice of what other people think you should do, of how you should build, what market you should tackle, of any of these things, you will, you know, thrash yourself to death uh and never actually get to anywhere. And I think it's way better to really build conviction in something and even if you're like 30% worse off, uh really fully internalize all of the lessons of those decisions along the way. figure out how to pivot quickly but understand and use that as a as a you know learning algorithm

effectively on on how to actually make decisions. And I think this reliance on what other people think or assuming that because somebody else did something one way and their business or their moment in time or whatever is going to be the answer for you is just like the the death. >> Let me ask you specifically what is the worst advice that you've received? >> I don't know. No, I don't have a good I'm I'm very uh I think as you guys know, we were very upfront when we're raising with everybody and that I I I don't want advice on what we're building or how we're building it. What I don't know is how to build a world-class company, right? I want advice on that. I don't want advice on the thing that we're building. I think I've always had part of this chip on my shoulder. Actually,

until very recently, I hated I hated reading uh I loved reading fiction. I hated reading non-fiction. And I hated reading all I loved just learning something from the ground up on my own. Trial and error is just the way that I absorbed things best because I understood how it worked and I could apply that. It wasn't until uh I listened some to Charlie Munker and he basically said if you if you don't take something from at least the best of the past you're just an idiot. And I was like okay maybe now like I've I've modified some. Um but I really tune out uh most advice in general. I think there's a bunch of advice that I actually would have liked that I didn't get about company building, but I can't even remember advice that I got because I feel like I just like

>> ignore it for the most part. >> So, what's the best advice you've gotten then maybe on the company building front? >> On the company building front, I I think I mean I think the stuff I wish people talked about that just never gets spoken about. So, everybody talks about how some somebody sent me the quote today I forget whether it was uh I think it was Mark. Here's Marker Ben on just like thanks so much for telling me to hire a players. You know, I was going to hire a bunch of idiots, but like now, you know what I mean? Like there's all this like really stupid obvious stuff. This is like yes, of course, everybody knows. But I think the stuff that nobody talks about is is like you have a bunch of really hard decisions to make. And part of that is like you start with a tiny

team of like three or five people and you build it to 15, you build it to 25 and it's like totally flat and non- hierarchical. And then you have to like build structure. There's a little bit in Reed's um you know Andy Grove and some of this other stuff on like okay how do you actually manage teams? How do you do that? But nobody actually talks about like how do you actually evaluate if those are the right people? You're 24 months into a business. You've grown from zero to 100 people. Are the people who are running the business early still the right people to be in leadership? Are they the right people to manage large growth? Are they going to bring you to 500 people? Is your uh you know CXX like the uh the the right person?

and did you title them too early? Like how do you make those just like unbelievably hard decisions of somebody who has been there from the beginning, been loyal for 2, three, four years uh and have to figure out what to do, when is the right time? Like none of that stuff gets talked about. I've never once heard anybody be like, and I was just I just spent time with a bunch of other entrepreneurs and one guy was amazing. He had built, you know, $8 billion business and sold it, built another business. He's building his third now. He's like 24 months in my entire company was all friends. They're people I know and I replaced my entire leadership team. We're at, you know, a billion dollars in revenue. We're going to be $5 billion three years from now. I'm probably going to do it again. And I was

just like, I have never once heard somebody talk about that thought. You know what I mean? It's just like there is a bunch of stuff that I think have a huge delta for how your company goes and a huge delta for getting the maximum performance. I think people in the valley have a bit of an unfair advantage. somebody who's backed by a 16Z who lives here probably has this advantage of you're a rocket ship and you're in this amazing trajectory and story and we're going to pull you in to ex this person from here right and like really place kind of great operators and sometimes it works obviously Cheryl with Facebook like times it works they're very famous I'm sure there's times it goes down in flames but it's just like outside of that take the senior person and help them come in and do this thing

uh it is just like not talked about there's so many critical decisions along the path that I wish somebody would just have better structured advice. So, I'm not how do you hire great people? It's it's easy enough to figure out how to hire great everyone who's at a certain point knows how to sell. They pitch to be they should know how to sell an employee and I get somebody there excited about the thing you're doing because that's your job. That's the whole thing. I don't think people know, especially techno founders, especially early. How do you navigate some of the other things and how do you really hold the bar exceptionally high? What does greatness look like in a function that you may have no like no freaking idea what greatness in finance looks like or in this or in that and like is this

person good? There just isn't uh you know it's just not something that is there and it's not something that's talked about and I think it is probably the largest gap in a founders's journey especially a firsttime founder of scaling to real scale and doing these things. It just like has not hit it all. I think the best uh the best advice that I've seen on this is you know I would say this but even if I didn't work at Andre and Horowits Ben Harowitz is the hard thing about hard things is like the canonical text that tackles these topics. Um which kind of leads us to our ne by the way this is we've been a little lengthy with the lightning round but it's okay we'll tighten it up with the last ones. Um that's one book but give us a give us a book recommendation

that you think people should read. You mentioned you have been a big fiction reader. >> Yeah. Yeah. uh large fiction reader for sure. Uh one book, so a book I read that is fiction that I I spent a lot of time fan a lot of fantasy, a lot of sci-fi. I'm sure a lot of people know that. Uh I listened to the Lonesome Dove, which pulit surprise book. >> Yeah. Yeah. Yeah. >> And it just like I mean it just really was just like amazing. I loved it so much. It was s such an enjoyable uh you know, ignore the non-fiction, ignore all the It was just like amazing. And I was just like, "Oh, you know, there's a couple you read Dune." And I'm like, "Dude, it's not my favorite book ever."

Because it's like a mass. It was extremely well written. Lonesome Dumb. I'm just like, I see why it won the Puliter Prize. It's just like incredible. >> Incredible book. Incredible book. Good pick. >> Um, what's your biggest productivity hack? >> I don't think I'm particularly good at it. So, it is literally uh just a a sacrifice of balance. You know, it's just like it is really just a you just do the things that you have to do. I I I don't have any magic trick. Uh it still sucks a ton of the time. It's just you have more than you could ever do. You're still like running at 1,000 miles an hour and you still have infinite responsibility. Just like do the thing.

You have to find what is the highest value thing that you can do and just apply yourself to it over and over and over again. >> Chew the glass. >> Yeah. >> Non-stop. I I wish I had a better answer. >> Um Okay. And finally, what is the smallest hill that you will die on? That's very interesting. Um, we have such a embedded culture. Like our entire company was built with Ryan and I just yelling at each other for 10 12 hours a day on a whiteboard and just like there is really nothing that I like there is no hill that I will die on probably other than the core principles other than this immutability censorship resistant like the underlying

permissionless side of the protocol everything else I feel like is malleable and everything else is just um you I I I think debate is amazing. You need people who somebody has to make the decision at some point in time. For us, it's usually who has higher conviction or who's closer to the problem. I think those are like our very quick gators. Um but yeah, there's very little that I'm just firm on. >> All right. Well, Brian, thanks so much for your time and for being here. >> Pleasure as always.

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